Russia proposes gas pipeline to Japan

By Edd Gent

Published Wednesday, October 15, 2014

Russia has proposed building a natural gas pipeline to connect fields in its far east with northern Japan.

The plan to build a pipeline between Sakhalin and the northern Japanese island of Hokkaido was presented to Japan last month by Russia, the Nikkei newspaper reported today, citing diplomatic sources it did not identify.

The construction of a gas pipeline between the two countries, which has been mooted for decades, would face many obstacles, including a dispute over islands taken by Russian forces at the end of the Second World War that has prevented Moscow and Tokyo from signing a formal peace treaty.

An official in Japan's Ministry of Economy, Trade and Industry involved in gas and oil denied Tokyo had received an offer from Russia, when contacted by Reuters. He declined to be identified due to the sensitivity of the matter.

Moscow, which is heavily dependent on taxes from oil and gas sales to Western Europe, has been trying to shift focus to Asian countries including Japan and China as potential customers for its vast reserves in eastern Siberia.

It has been offering lower-priced gas to Japan, which buys about a third of world shipments of liquefied natural gas (LNG), a supercooled form of the fuel, the Nikkei said.

Japan's imports of LNG have surged in the wake of the Fukushima nuclear disaster of March 2011, which has led to the shutdown of all the country's reactors. Russia supplied almost 10 per cent of Japan's LNG imports last year.

Moscow and Tokyo have been discussing a number of projects involving LNG supplies to Japan from Sakhalin and Vladivostok, but talks have slowed as the Japanese government fell in line with sanctions on Russia over the Ukraine crisis.

The Nikkei report comes a day after Russia's state-controlled gas company Gazprom said it may drop its Vladivostok LNG project.